ITAT KOLKATA BENCH ‘B’
Deputy Commissioner of Income-tax, Circle 6, Kolkata
Gulshan Investment Co. Ltd.
IT Appeal No. 666 (Kol.) of 2012[ASSESSMENT YEAR 2008-09]Date of pronouncement
Pramod Kumar, Accountant Member
By way of this appeal, the Assessing Officer has
challenged correctness of learned Commissioner (Appeals)’s order dated 21st January 2011, in
the matter of assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter
referred to as ‘the Act’) for the assessment year 2008
-09, on the following ground:That on the facts and circumstances of the case, learned CIT(A) erred in law in holding that thedisallowance under section 14 A of the Income Tax Act, read with rule 8D of the IncomeTax Rules, is not applicable in the case of the assessee since the shares were kept as stock intrade. The CIT(A) should have upheld the disallowance made by the AO.
The appeal is time barred by 10 days, but the Assessing Officer has moved a condonationpetition, duly supported by an affidavit. Learned counsel for the assessee does not object to theprayer for consolidation. In this view of the matter, and having regard to the material on record,we condone the delay and proceed to take up the matter on merits.
The issue in appeal lies in a very narrow compass of undisputed material facts. The assesseeis engaged in the business of share trading. During the course of scrutiny assessmentproceedings, the Assessing Officer noticed that while the assessee has earned dividend incomeof Rs. 18,91,556, the assessee has not made any disallowance under section 14A in respect of
“expenses relatable to the above exempt income”. The Assessing Offficer als
o noticed that theassessee had paid interest of Rs. 10,34,315. On these facts, the Assessing Officer computedthe disallowance under section 14 A r.w.r. 8 D as follows:
Disallowance under section 14A :
During the relevant year, the assessee had earned dividend income of Rs. 18,91,556/-. It wasfound that the expenses relatable to above exempt income has not been included back tothe total income for taxation. (2) Assessee paid interest for Rs. 10,34,315/-. As per point 2 of Rule 8D Rs. 7,97,762/- is disallowed. As per point (3) disallowance is worked out as section 14Aread with Rule 8D of the I.T. Act as under :-